Good day, and welcome to the GreenPower Motor Company third quarter earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Michael Sieffert , Chief Financial Officer. Please go ahead.
Thank you. This is Michael Sieffert, the Chief Financial Officer of GreenPower Motor Company. I would like to welcome everyone to our call to discuss GreenPower's results for the three- and nine-month periods ended December 31, 2023, and recent developments. I'm here today with our Chief Executive Officer, Fraser Atkinson, and our President, Brendan Riley. During today's call, we may make comments or statements about our future expectations, plans, and prospects, which may constitute forward-looking statements for the purpose of the Safe Harbor provision under the Private Securities Litigation Reform Act of 1995 and applicable Canadian securities laws. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in our quarterly interim results and MD&A filed on SEDAR and on EDGAR. In addition, these forward-looking statements relate to the date on which they're made.
We anticipate subsequent events and developments may cause the company's views to change. GreenPower disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Also, during the course of today's call, we may refer to certain non-IFRS financial measures. Reconciliation of these non-IFRS measures can be found in our MD&A filed on SEDAR and on EDGAR, and is also located on our website at www.greenpowermotor.com. I'll now pass the call over to Fraser Atkinson, GreenPower's CEO, to discuss highlights for the quarter.
Good morning, and thank you for joining GreenPower's quarterly earnings call today. Our school bus group continued to make great strides in the third quarter. We achieved a significant milestone with the delivery of four Type A Nano BEAST school buses that were the first all-electric, purpose-built school buses manufactured in West Virginia. Immediately following that delivery, production of the Type D BEAST school bus began in the West Virginia plant, which in the immediate term, will fulfill current orders for 38 BEAST school buses in West Virginia and prepare the production team for the mixed manufacturing of BEASTs and Nano BEASTs at the facility to meet the projected demand. Presently, we have live orders for 102 of our Type D Mega BEAST, BEAST and Type A Nano BEAST school buses, including our first order from our dealer in the state of New York.
We also have a qualified sales pipeline for 164 GreenPower school buses. On the commercial vehicle side of the business, we had deliveries this quarter that included 10 EV Star Cab & Chassis to the Canadian unit of a global retailer, who upfit the vehicle for fulfillment of their orders to customers in the Greater Toronto market. Having said that, our commercial vehicle group, with EV Star Cargo and EV Star Passenger vehicles, is several quarters behind the school bus group in terms of its order book. We expect to achieve similar growth with live orders, purchase orders, and a qualified sales pipeline by leveraging new and existing incentive programs as well as third-party relationships. We've had delays from customers with deliveries of our EV Star Cab & Chassis. With inventory ready to go, we are now working on scheduling deliveries for these.
Collectively, these will create a robust commercial vehicle group, which, combined with the school bus group, will uniquely position GreenPower in the medium and heavy-duty EV sector. Over the past few years, we've maintained significant levels of finished goods inventory. We don't need to maintain these levels due to stocking orders from dealers who can provide demonstrations and ride and drives to their customers, along with a reduced competitive landscape. This is allowing us to shift from fulfilling orders from inventory to manufacturing vehicles pursuant to customer orders. How is GreenPower going to finance an increase in school bus orders and changes with our commercial vehicles? Instead of a traditional facility, we needed to secure a facility focused on production financing.
This morning, we announced that we've entered into a revolving loan agreement with Export Development Canada, or the EDC, for up to $5 million to fund all-electric vehicle production for certain customer orders, allowing for multiple advances over a two-year period, with repayments when vehicles are delivered. The revolving nature of the facility provides the flexibility to fund multiple orders and offers incremental capital in addition to GreenPower's existing $8 million operating line of credit and the guarantee of up to $5 million of standby letters of credit provided by EDC. I'll now pass the call to Michael Sieffert , GreenPower's CFO, to discuss our financial results for the quarter.
Thank you, Fraser. For the three months ended December 31, 2023, GreenPower generated revenue of $8.2 million, primarily from the sale and lease of 34 all-electric vehicles, which included 13 BEAST and Nano BEAST school buses. This is a decline of 36.3% from the $12.8 million of revenue generated in the same quarter in the prior year from the sale of 101 all-electric vehicles, which included one Nano BEAST. Both quarters also included revenue from leases, parts sales, and truck bodies. Gross profit was $1.4 million, and gross profit margin was 16.6%, compared to $2.2 million and a gross profit of 17.4% in the prior year's quarter.
The margin decline in the current quarter was primarily due to an inventory write-down of $408,000, which was included in cost of sales. The gross profit margin for the quarter would have been 21.6% without the inventory write-down. GreenPower generated a loss for the quarter of $4.6 million, compared to a loss of $3.4 million in the same quarter of the prior year. For the nine months ended December 31, 2023, GreenPower generated revenue of $34.2 million, primarily from the sale of 196 vehicles in the current period, which was an increase of 40.1% from revenue of $24.4 million in the first nine months of the prior year, which was from the sale of 176 vehicles.
Gross profit was $5.4 million, and gross profit margin was 15.7 million, or sorry, 15.7% in the nine months ended December 31, 2023, compared to $4.9 million at a gross profit margin of 20.1% in the same period of the prior year. Inventory write down of $408,000 included in the current year period, reduced the gross profit margin by 1.2% from 16.9%- 15.7%. GreenPower generated a loss for the nine-month period of $11.7 million, compared to a loss of $11.2 million in the same period of the prior year.
As at December 31, 2023, GreenPower had cash of $4 million, which was an increase of $3.4 million since the beginning of the year, and working capital of $19.4 million. Improvements in the company's cash and available liquidity since March 31, 2023, were largely due to higher sales and due to a focus on collections, which led to lower levels of inventory and accounts receivable. I would now like to turn the call over to GreenPower's President, Brendan Riley, to highlight some of the innovative achievements GreenPower reached during the quarter.
Thank you, Michael, and good morning to you all. As Fraser mentioned, the continued strides are being made by our school bus division. To this end, and in our effort to help eliminate smelly, polluting diesel school buses, we have been expanding our national efforts through the addition of new dealers and have hired more territory managers to support both our school bus end customers and dealerships alike. A major technical accomplishment of this division during this quarter was the introduction of the new Mega BEAST. It's our newest all-electric, purpose-built school bus. We launched the Type D Mega BEAST school bus to meet the demands from school districts requiring V2G and longer range. This 40-foot, 90-passenger, Type D, zero-emission school bus delivers class-leading range of up to 300 miles on a single charge.
This is all due to the 387 kWh battery pack. Its V2G capabilities allow for more stable electric grid and community sustainability in areas which is deployed. I'm pleased to say that the market responded immediately to the introduction of our product, and our California dealer, Model 1, just placed an order for 25 Mega BEASTs for the Montebello Unified School District just two weeks after we made the announcement of this product. Our commercial vehicle division has also produced a new innovative product during the quarter. GreenPower delivered its first EV Star Cargo Refrigerated Van to a UC school in California. With dual batteries for increased resilience and continual eTRU cooling for the cargo area, it has diamond plate floor and an FDA spec interior area that is smooth and allows for easier cleaning and sanitation for any of the refrigerated goods.
In the next few months, we are expecting more innovation from this group from the cargo transportation space. At this point, we would like to now open up the call to any questions.
Thank you. We will now begin our question-and-answer session. To ask a question, you may press star, then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question will be from Greg Lewis from BTIG. Please go ahead.
Yes, thank you, and good morning, everybody, and thanks for taking my questions. Fraser, I was hoping to talk a little bit more about West Virginia. Congratulations on getting some of those orders out the door. In terms of the production ramp, you mentioned the ability to go dual line, BEAST and Nano. Any thoughts of, you know, how we should think about, you know, over the next few quarters, what those deliveries, that delivery production profile could look like? And just as we think about the remaining, the BEAST Class D buses to West Virginia, is that order? Do we need to get that order out of the way before we start selling buses into New York? Or is that, are we going to expect those kinda to be coming off the line concurrently?
Well, first, well, thanks for the multifaceted questions there, Greg. First off, our initial thought was that we would really only be positioned to do one of the Type A or the Type D, being the Nano BEAST or the BEAST, in West Virginia. But we're now at a place that having gone through the full cycle of the Nano BEAST and, you know, and well into the first tranche for the Type D BEAST, that we believe we can do both. And we certainly have the capacity to manage runs of both of those vehicles. So, that has changed the dynamics.
In terms of our expectation or the throughput, you know, we're going to need a full cycle of the BEAST as we have done with the Nano BEAST. As the first production run, you run into all of the various startup issues and so on, in terms of each of those runs. So, you know, that's what we're going through right now. Once we get this production run through, and we're starting into the third and the fourth runs, if you will, we'll have much better visibility on what that throughput would be. But we continue to add people and grow the production crew, so the capabilities are increasing by the month.
In terms of the priorities, we've got, you know, the orders from New York, and certainly the expectation is orders from additional states on the East Coast, is that all of those, or substantially all of those, will be fulfilled out of West Virginia. And the ordering of that will depend on, you know, really what we're focused on in terms of the production run at that point in time. So, for example, if the third or the fourth production line or run is for Nano BEAST, and we have more Nano BEAST outside of the state of West Virginia, then that will end up being the mix of the deliveries and the sales, for, you know, for that particular period.
Okay, great. And then I did have a question on inventory. You know, it was good to see that come down, and you made some comments in the prepared remarks around maybe a little bit more, you know, build to order. Is there any kind of way we should be thinking or any kind of guidance you can give us how you're thinking about inventory management? And are we going to be, you know, maybe for the next couple of quarters, we're going to be able to kind of whittle down some of that inventory, you know, with you know, I guess, improving our cash conversion?
Well, there may be a timing issue where we end up with, at the end of any particular month or by extension, a quarter or year-end, where we have, you know, higher than expected finished goods, simply because that's, you know, what's come off of the production line, and we haven't delivered and recognized revenue, and so that's sitting in finished goods inventory. But the plan is certainly over the next few quarters that, you know, we can continue to utilize existing finished goods level and draw that down, while we're, you know, moving from, you know, fulfilling customer orders from inventory to, you know, where we're, you know, into manufacturing and production pursuant to customer orders.
So, you know, that's the plan over the next few quarters, and the facility we announced this morning is, you know, a big part of helping us transition or pivot to that approach.
Okay, great. Thank you very much.
Thank you. Our next question is from Craig Irwin from Roth MKM. Please go ahead.
Hi, good morning. First, I'd like to say congratulations on the strong backlog and the progress with the BEAST and the Nano BEAST and the Mega BEAST. So, it's nice to see everything coming together. I wanted to ask specifically if you could talk about how you're working with your customers on charging infrastructure. There's a conversation out there about the installation of charging infrastructure being a pinch point for the acceptance of these school buses, about you know, the ability to actually site some of these fleets, being restricted because of utility timelines for new infrastructure. And you know, is there really maybe an advantage for the Nano BEAST as far as near-term volumes, given the complexities of adopting this technology?
Well, I'll let Brendan get into some of the details on your first question, but at a high level, and I'm glad you mentioned the word utility, because it's not just the perception, is that, you know, the availability of chargers or, you know, the hardware side of the charging infrastructure is the pinch point. It's really, in large part, the utilities, and it's also the expectation of customers that are looking at vehicle-to-grid solutions and a broader implementation than simply acquiring and running school buses or all-electric school buses. So there's a lot of dynamics that are in play that have affected the timing on that side of our deployments.
As far as the mix of products that we have brought to market, is that you're quite right that the Type A Nano BEAST, which is built on our EV Star platform, and by extension, utilizes a lot of the same parts and components, which provides for ease of deployment. Also, is easier to deploy in terms of the infrastructure side, as one can use a Level 2 charger for a DC Fast Charge. And so, you know, it really has a lot of flexibility in that, if the Type A Nano BEAST can be charged between a morning run and an afternoon run and still have sufficient battery capacity to do an evening event or activity run, then, you know, then, you know, you know, it's a lot easier to install that Level 2 charger.
But if they need to get a much faster top charge, then we have the flexibility of installing a Level 3 charger for that vehicle. And on that, I'll turn it to Brendan, who can provide a little bit more visibility on, you know, on your first question regarding charging infrastructure.
Yeah, thank you, Craig, for the very, thoughtful question. Good morning. This is Brendan Riley. Part of our strategy was, of course, to have the three different battery sizes from the get-go. We have a car-sized battery in the EV Star line of vehicles, which the Nano BEAST is built on. That allows us to charge very easily with Level 2 overnight charging, the same kind of charging you'd have in your house, the same charging I have in my house. With the BEAST, again, we've got a 200 kWh battery. You can do overnight charging on Level 2, but you're really pushing it to the limit.
And then the Mega BEAST was really designed for those with DC fast charging available, and who have an interest in using the vehicle for all of its efforts to bring students to and from school, and the V2G. So you've got really enough left over to be meaningful to the grid and have some a normal access to the battery storage on the vehicle. Now, the marketplace has changed more slowly than we hoped, but has changed due in part. There are a lot more companies able to install chargers. The utilities are trying to get ahead of the curve a lot better these days, and we do see improvements, also including the availability of charging EVSE, which is electric vehicle supply equipment, the chargers and related equipment.
But the main thing we're seeing right now is, we mentioned our pipeline. Some of that pipeline are orders that the customers are waiting to figure out how they're going to do charging. I think they've got the money and the ability to buy, but they're waiting until they have their charging figured out. So I think you're going to see kind of a fast uptake on charging capabilities, installation, charging for the chargers. We are having more companies involved and in that space, and I think they're becoming more efficient and better adept at installing the chargers.
Thank you for that. So my second question is about working capital. You guys have done a really good job managing working capital and generated a decent amount of cash there over the last few quarters. Can you maybe describe for us how well matched the inventory of work-in-process or finished goods is to you know, anticipated near-term deliveries? You know, would you expect working capital to be you know, a positive contribution to to cash in this current quarter?
Well, I'll turn the details over to Michael, but at a high level, our work-in-process is fairly well aligned with the production flow that matches the, you know, fulfillment to customer orders, as opposed to production to inventory. Whereas we have been over the last few quarters and will continue over the next couple of quarters, to realign our finished goods to match that. So, you know, at a high level, you know, finished goods need some work to, you know, to fully align, and the rest, in terms of work-in-process and to some extent, our parts supply that we sell separately as well to customers, is better aligned with, you know, where we are right now with our strategy on manufacturing.
Yeah, just to add a couple of very quick points. I think it really has been a focus of the company over the past, you know, 9- 12 months, to focus on inventory and bringing that down to a level that is better matched to sales. But I think the other thing to point out, Craig, is that with the facility that we announced this morning of $5 million, that's earmarked for funding production, and so that is, you know, really focused on funding that inventory growth. And, you know, we anticipate, given our current order book, that a lot of that will be used towards all-electric school bus order book fulfillment.
Understood. So my last question, if I may. Gross margins in the quarter, you know, the historic average is quite a bit higher. So is it fair for us to maybe consider, you know, the early production of some of these BEASTs and Nano BEAST units to be. Maybe a lower margin because of greater man-hours to complete and other factors in there, and that, you know, we could see those, you know, trend up over the next couple of quarters as far as the overall gross margin levels. Is that fair?
That is very fair, Craig.
Yeah, go ahead, Brendan.
That's very fair. You know, training, getting employees up to speed, costs money. It's an investment, and you're going to see the margins continually improve. Also, we're starting to see some stabilization of our costs as it goes, you know, from materials, raw materials, and so on. So we should see a good shrinkage in our costs and an increase in our GP.
Excellent.
Yeah, in terms of the short term, Craig, you know, Michael and his section commented on the one-time charges that we had made, which in part relates to your previous question that, you know, as we're you know, realigning our business and working capital and you know, and changing the mix in terms of finished goods and work processes, we have incurred some one-time impairment costs on our inventory you know, as we make that transition. So that we expect is a short-term proposition. And as we get into a continuous production flow where you know, the inventory is aligned with all of that, then you know, that's going to help the margins as well.
Excellent. Well, congrats on the, on the progress here. We look forward to, watching, you know, the continued steps forward.
Thanks, Craig.
Thanks, Craig.
Again, if you have a question, please press star then one. The next question is from John Gay, from Quiet Investor . Please go ahead.
Good morning, guys, and congratulations on the continued progress. I sense by the numbers of vehicles sold that Workhorse is not in the mix by much of any. Is that true? And if so, how do we look upon that so-called contract? Hello?
Sorry, I cut out there. Well, we don't, you know, we haven't pointed out specific metrics for our customers over the last number of quarters. We did comment in our earlier remarks that, you know, while we have not had, you know, some cab chassis deliveries, we are, you know, currently, you know, working on schedule in terms of future deliveries for, you know, for our cab chassis. So, you know, there's been a short-term pause, and we expect to have that resume in, you know, in the not-too-distant future.
Okay. Thank you.
And once again, if you have a question, please press star then one. And the next question is a follow-up from Greg Lewis from BTIG. Please go ahead.
Hey, thanks, and good morning, and sorry to hop back in, but I did want to understand. I thought it'd probably be good to understand. So congrats on the $5 million revolver. Are there different hurdle rates, i.e., that could be achieved where you could come back and expand that maybe to $8 million -$10 million? You know, just as we kind of get through, as we get production going, I would think you'll probably outgrow that $5 million number. A Mike, any thoughts around that?
Well, I.
Look, you know, first.
Go, go ahead. Go ahead, Michael.
I was going to say, first of all, you know, we are, you know, very appreciative of the support from EDC. We think this is a very, you know, efficient and well-priced facility for the company. But to answer your question, yeah, there certainly is the opportunity to revisit this in terms of size over time as, as our business grows, and, and we can certainly look to upsize this. But, you know, for the time being, we, you know, we feel this is a good size for the company and, and, you know, will definitely be put to use, given the, the orders we have in place. Fraser, if you have anything to add.
Well, that's a good summary.
Okay, yeah, now understood. It just seems like pretty good attractive financing. So yeah, you know, hitting that, you know, building out on that and then expanding that would, would obviously be super, super positive for the company. All right, guys. Thank you very much.
Thanks, Craig.
Ladies and gentlemen, this concludes our question and answer session. I would like to turn the conference back over to Fraser Atkinson for any closing remarks.
In closing, we delivered the first four Type A Nano BEAST school buses manufactured in West Virginia to four school districts in the state, and started production of our larger Type D BEAST school buses. We delivered 10 EV Star Cab & Chassis to the Canadian unit of a global retailer, who will outfit the vehicles for fulfillment of orders to their customers in Toronto. We delivered the first EV Star Cargo refrigerated van to a California university, and we launched the Mega BEAST with twice the battery capacity of the BEAST, providing of a range of up to 300 miles on a single charge. We made significant progress while increasing our cash position by $3.3 million from the start of the fiscal year.
Subsequent to the quarter, we secured $5 million of production financing from EDC, who have also guaranteed $5 million of standby letters of credit, which vastly improves our manufacturing capabilities. Thanks for your support. This concludes the third quarter earnings call for GreenPower.
Thank you, sir. The conference has now concluded. Thank you for attending today's presentation, and you may now disconnect. Take care.